Organized Crime Bites Auto Insurers

The alarming rise in insured cost of auto theft and fraud over recent years has much to do with the involvement and growth of organized crime in Canada, according to two Insurance Bureau of Canada (IBC) claim investigators who spoke at the recently held Annual Toronto Fraud Forum. In many instances, the criminal organizations involved are international with activities spanning from gun and drug running to the selling of false identification papers such as passports. Often, stolen vehicles are used as “mules” for international smuggling of such goods, they say.

Investigation of organized crime is a fairly new concept for the IBC, observes Bill Cameron, national director of auto theft services at the IBC’s investigative services division (ISD). However, there is little question to the fact that organized crime is heavily involved in auto theft rings, he adds. “Crime groups are involved across North and Central America…from everything from drugs, guns, passports to cars.” Bob Whitman, national director of injury rings investigation at the IBC’s ISD, confirms similar involvement in fraudulent bodily injury claims. “[Organized crime involvement] is a national and provincial concern.” Furthermore, he points out that in most instances the money made from such criminal activities eventually leaves Canada.

Cameron notes that, while auto theft costs insurers about $600 million a year, theft frequency rose by 5% last year while recovery of vehicles fell from 95% to around 75%. And, while the major international rings are the biggest concern, even small “mom and pop” auto theft rings are making about $10 million a year. As such, the IBC is currently lobbying the federal and provincial governments to assign dedicated prosecutors to dealing with auto theft cases. This has not yet happened, he adds, although some governments have begun programs to train prosecutors in dealing with auto theft. “This is step one, we plan to push for this across the provinces.” The IBC is also lobbying to get auto theft built specifically into the criminal code. “But everything with the government takes a long, long time.”

Research suggests that fraudulent bodily injury claims cost insurers about $327 million a year in Ontario, says Whitman. The most effective means of combating this form of fraud is for insurers to share claims data, he notes. The IBC’s “Information Company Claims Exchange” (ICCE), which currently has over 16 million claims on record, can only be effective if insurance companies supply all information they have on claims, he adds.